Free Cost Accounting MCQs with Answers
941 Cost Accounting MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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941 questions · page 24 of 48
- A. offshore cost
- B. outsource cost
- C. in-source cost
- D. opportunity costFinance
Explanation: The benefit lost by investing money in idle inventory instead of its best alternative use is an opportunity cost.
Correct answer: opportunity costFinance- A. sunk factors
- B. quantitative factors
- C. qualitative factors
- D. both B and CAccounting & Auditing
Explanation: Decision outcomes are commonly evaluated using both quantitative factors, such as costs and revenues, and qualitative factors, such as…
Correct answer: both B and CAccounting & Auditing- A. identify the problem
- B. identify the linear variable
- C. identify the certainty
- D. identify the multiplier
Explanation: Decision-making begins by identifying and clearly defining the problem, because the objective and alternatives cannot be assessed until…
Correct answer: identify the problem- A. expected cost
- B. expected revenues
- C. irrelevant costs
- D. relevant costs
Explanation: Relevant costs are future costs that differ between alternatives and are therefore useful in decision-making when preparing income…
Correct answer: relevant costs- A. differential in-sourcing
- B. off-shoring
- C. incremental outsourcing
- D. differential outsourcing
Explanation: Obtaining products or services from suppliers in another country, usually to reduce costs, is called off-shoring.
Correct answer: off-shoring- A. past costs
- B. future costs
- C. expected costs
- D. sunk costsFinance
Explanation: Past costs are sunk costs because they have already been incurred and cannot be altered by a present decision, making them irrelevant.
Correct answer: past costs- A. net income irrelevancy
- B. operating income maximization
- C. operating income minimization
- D. operating income relevancy
Explanation: Low-level managers generally control day-to-day operations, so their decisions focus on improving or maximizing operating income.
Correct answer: operating income maximization- A. value costs
- B. future function costs
- C. business function costs
- D. sunk function costs
Explanation: Marketing, manufacturing, distribution, and similar costs are grouped according to business functions across the value chain, so they are…
Correct answer: business function costs- A. expected factors
- B. recorded factors
- C. qualitative factors
- D. quantitative factors
Explanation: Qualitative factors describe non-numerical outcomes such as employee morale, customer satisfaction, or supplier reputation.
Correct answer: qualitative factors- A. linear correlation
- B. making decisions
- C. implement decisions
- D. evaluate performance
Explanation: After identifying the problem, considering alternatives, and analysing relevant information, the fourth step is to make the decision.
Correct answer: making decisions- A. salvages
- B. relevant
- C. irrelevant
- D. depreciated cost
Explanation: The book value of an old machine has already been incurred and cannot be changed by a current decision, so it is irrelevant.
Correct answer: irrelevant- A. in-source cost
- B. opportunity cost
- C. offshore cost
- D. outsource cost
Explanation: Opportunity cost is the contribution or benefit sacrificed when a resource is used for one purpose instead of its next best alternative.
Correct answer: opportunity cost- A. expected future costs
- B. serial costs
- C. parallel costs
- D. abnormal costs
Explanation: A relevant cost must be an expected future cost that differs between the alternatives being considered.
Correct answer: expected future costs- A. independent revenue
- B. incremental revenue
- C. differential revenue
- D. dependent revenue
Explanation: Differential revenue is the change in total revenue between two alternative courses of action.
Correct answer: differential revenue- A. have high correlation
- B. be in future
- C. be in past
- D. be zero correlated
Explanation: Relevant costs concern the future because management can still influence them through its decision.
Correct answer: be in future- A. quality of suppliers
- B. dependability of suppliers
- C. production irrelevancy
- D. both a and b
Explanation: A make-or-buy decision considers more than numerical cost, including whether an outside supplier can provide dependable deliveries and…
Correct answer: both a and b- A. operating cost
- B. sunk cost
- C. in-house cost
- D. out-house cost
Explanation: The existing equipment's book value is a sunk cost because it arose from a past purchase and cannot be recovered or changed by the…
Correct answer: sunk cost- A. fixed output
- B. variable output
- C. breakeven number of units
- D. total number of units
Explanation: At break-even, total contribution margin equals total fixed cost. Dividing fixed cost by contribution margin per unit therefore gives the…
Correct answer: breakeven number of units- A. $900
- B. $1,200
- C. $1,500
- D. $1,600
Explanation: Contribution margin per unit equals selling price multiplied by the contribution margin percentage: $5,000 × 30% = $1,500.
Correct answer: $1,500- A. 12%
- B. 20%
- C. 5%
- D. 15%
Explanation: Contribution margin percentage is contribution margin per unit divided by selling price: $1,000 ÷ $5,000 = 20%.
Correct answer: 20%